Don’t talk to CorpDev – Part Deux

Corporate Development, Strategic Business Development, Corporate Business Development, or any other amalgamation – are likely all the same teams with small caveats. Traditionally, CorpDev’s mandate was to buy companies. That’s traditional. But it’s 2020 and we can all attest that business models have changed over the past years. These days CorpDev isn’t simply a team being told from the top-down what to go find and buy. More often than not it’s an assortment of functions baked into a multi-faceted team who brings the outside-in, from education to execution. This takes the form of helping business lines execute strategic partnerships, take stakes in venture investments, and yes the vanilla M&A. That team could also be tasked with helping draft corporate strategy by informing business unit leaders of emerging threats given their overweighted exposure to the startup ecosystem. It’s exciting work!

This is why it’s disappointing to hear people say ‘don’t talk to CorpDev unless you’re ready to sell.’ (Enter Paul Graham’s essay) It’s short-sighted. It’s akin to having a VC reach out to a founder, ask for a conversation, and the founder says, “no thanks, we’re not currently raising.” The most likely response from the VC would be, “cool, I wasn’t looking to invest but wanted to create a connection.”

All of it is a relationship-driven business. Executing partnerships, investments and acquisitions are more likely to happen if you previously knew the founders or investors in advance. And you don’t need to wait to talk to VCs or CVCs or ‘CorpDev’ until you’re ready – talk to them when you have mutual interests that could be beneficial to both parties. Talk to them when you’re looking to network. Don’t wait to talk to them until, and only until you’re ready to begin a raise or be sold. If you do so there’s a chance you’ll get a response like the following, “thanks for reaching out and happy to still connect, but we just did X 3 months ago and would have loved to connect back then.” 

CorpDev benefits regardless if their company grows through in-organic ways. And if it’s a legit team, they’re involved regardless in everything of strategic value that’s in-organic. Outside engagement with the startup ecosystem is what that usually looks like. Even more so, transactions in my experience have happened by having existing relationships. This is the same team sitting at the leadership table adjacent to the business unit heads with a purview into the organization’s strategy – they know the players involved, and what is necessary to get something executed. If they’re good, they’ll be frank on timing and engagement strategy. For example, “our process takes 5 weeks to execute from soup to nuts, and you’ll know in the next week if X is possible.”

Additionally, having pre-existing relationships with CorpDev can help outside startups and companies bypass red-tape or headaches. I see this a lot: a Series A-C startup working with an individual at the firm already for the past two months, only to find out that that person who’s ‘in’ the business needs to go through procurement which includes an RFP process to get a contract signed off on. That individual didn’t know because it was the first time they were engaged in something like that, regardless of their passionate intentions. What the startup’s sales executive thought would be signing of the account in a quarter quickly turned into a 12-18 month procurement process that they now have the chance of losing. This usually comes to fruition as pen needs to be signed to paper and the individual who ushered them in is not the individual who’ll be signing off on the $50,000 PoC to test validity leading to production.

Having a contact at the firm’s CorpDev team can always quickly hash something like the aforementioned out over a 15-minute phone call at the beginning, providing a black and white picture of what they should expect and the best way to close. CorpDev understands who’s inside the organization. CorpDev can help ‘herd the sheep’. And if they’re good (respected) CorpDev can influence without direct authority.

Talk to CorpDev. Talk to them when you’re curious. Talk to them when you’re about to start raising. Talk to them when you’re kicking off direct sales, auctions, and more. Don’t wait.

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